Pollen Street Capital, the private equity firm which won shareholder approval to take over challenger bank Shawbrook last year, has raised a new £400m fund to invest in financial services businesses.

The firm's third fund, which was initially targeting £350m, has already spent 53 per cent of the total on deals including Shawbrook, direct lending business 1st Stop Group, and specialist insurance broker Miles Smith.

It is one of a number of private equity firms choosing to focus on the financial services space, as fintech – or financial technology – is booming. London-based peer AnaCap has been in the sphere since 2005, while Pollen Street is a relative newcomer having been founded in 2013 when Lindsey McMurray led a spin-out from Royal Bank of Scotland.

“We are fortunate to have a high-quality set of investors and we very much appreciate their support in making this a successful fundraising. We are committed to earning their continued support by maintaining a focus on value creation,” said Pollen Street Capital's head of fundraising Magnus Christensson.